A lot of initiatives are being implemented to encourage and nurture the entrepreneurial ecosystem in the North of Lebanon. From incubators, centers, as well as specialized funds all have played a role in encouraging the youth to take their careers into their own hands and start a new business. To date there are more than 120 start-ups in the North operating in the IT, creative industry, and education sectors, which if provided with the right support can turn into global players. Below is a snapshot of the key players and some success stories that are contributing to regional development.

Financial Support

In addition to traditional means of financing through commercial banks, Kafalat provides guarantees to companies operating in the North, with more than a 1400 companies supported to date, while IDAL can provide tax breaks up to 10 years to companies operating in productive sectors. In addition, the Maurice Fadel Foundation (MFP), a non-profit organization, provides a prize for the best business plan for start-ups in the North in order to stimulate the culture of entrepreneurship among youth.

Technical Support

Some programs have been put in place by various organizations to provide entrepreneurs and start-ups with the needed training to turn their ideas into business models. Among these figure the IECD (Institut Européen de Cooperation et de Development) a French development organization which has trained and accompanied more than 110 entrepreneurs in the North to develop appropriate skills and reinforce business of entrepreneurs

A Selection of Success Stories in the North

Is one of the new players in the Olive Oil markets in the North with international reach in France, Hong Kong, Japan, Nigeria, Switzerland, the United Arab Emirates and United States. It produces and sells olive derivatives products.

Olive Trade, which is the manufacturing company, is currently serving the local Lebanese market through "House of Zejd" concept store, specialized shops, organic stores, restaurants and hotel chains. 

 

 CardioDiagnostics is one of the leading tech start-ups founded by young entrepreneurs in the North and which provides physicians with innovative technology to properly diagnose and treat patients with cardiac problems. The company currently serves the US market, with more than a 1,000 patients, 3 of which were saved because of this close monitoring and an early detection of heart arrhythmia. They are in partnership with one of the biggest hospitals in California and several medical centers. CardioDiagnostics' aim to enter the Lebanon and Emirati markets as a start and then expand to the entire Middle Eastern region. 

  

 

 

Is another technology start-up which creates furniture and home accessories based on 3D Arabic typography. The company currently serves the Lebanese and GCC markets, with plans to create an e-commerce platform to have a global outreach. Kashida also sells its products to retail stores in the GCC region and is looking to expand to key international cities.

 

Lebanon's Competitive Advantage

Despite the many hurdles that start-ups can face in the North, there are many competitive 

advantages that have allowed start-ups to thrive mainly: 

• ability to leverage local talents in solving global problem
• entrepreneurial spirit
• highly-skilled and highly-educated workforce
• the region's creative and production hub

 

Reforms Needed to Encourage Start-ups 

 A quick survey was sent out to key start-ups in the North to ask them about changes and reforms they would like to see in order to facilitate their operations:

 

• the amendment and implementation of business laws 
• a need to focus on governmental financial incentives for start-ups and provide better training and orientation to the working force in order to match the needs of the demanding global economy
• offer government subsidized offices and internet prices as well as tax deductions
• media support in highlighting achievements 
• access to funds

 

The IBM Institute for Business Value recently released its 2014 report on Global Location Trends, providing insights on the direction of foreign investments around the world and the latest trends in foreign companies strategies.

WORLDWIDE OVERVIEW

North America and Europe have regained their attractiveness as key investment destinations after witnessing a dip after the financial crisis, and Asia remains a top destination for investors. More specifically, Western Europe and mostly Germany experienced increases in investments while Eastern European countries are soon turning into the preferred locations for companies in Europe. Among Asian countries, China is seeing a change in its role in the global economy as a result of increasing labor cost, with Vietnam and Thailand gradually positioning themselves as the new preferred export platform for production activities. Emerging economies such as India and Brazil have seen a shift in sentiment with decrease foreign investment activity, with similar trends witnessed for Africa and the Middle East. The success of a country in attracting FDI is not only measured by the value of investments generated and jobs created but most importantly  by the value and knowledge intensity created by these investments. In that sense, Ireland would be the top performer worldwide in terms of value created by investments, attracting research and development (R&D) activities in Life Sciences and ICT, coupled with high value investments in financial services. Malta established itself as a gaming and digital media hub.

SECTORS ON THE RISE

The streamlining of foreign investments to new locations can be linked to changes in corporate architecture  and operating models across different sectors. Market-drive sectors mainly tourism, wholesale & retail, and food & beverages have seen a surge in attractiveness notably in emerging markets. The tourism sector in particular was one of the largest recipient of FDI and generator of jobs. On the other hand, the performance of the ICT and business services sectors in generating jobs has not been at par with previous years as a result of a shift in companies' strategies. Indeed the landscape for ICT has changed from large global service delivery centers to being focused on more geographically dispersed and domestic centers. Therefore instead of establishing large remote centers for service delivery to cut down on cost and benefit from economies of scale, companies are more and more focused on customer / market needs and building localized centers that focus on the customers. The Business Process Outsourcing (BPO) model is therefore increasingly being adopted for more higher value activities. This shift in model is also explained by the transformation of the ICT industry itself, with the cloud, data, mobile and social technology reconfiguring the way information technology is provided to individuals. Substantial new opportunities are being available, leading to a surge of start-ups and rapidly growing SMEs. This new trend is creating new types of investment activities with companies smaller in scale but higher value add. There is definitely an opportunity for Lebanon to capitalize on this market trend and leverage its specialized human capital to attract companies who wish to serve the MENA market. Increased marketing and branding of Lebanon's positioning should be among the priorities of policy makers for 2015.

The same trend is also happening in global manufacturing: while China used to be the main destination for investors looking for labor intensive operations, more competitive centers are emerging in Vietnam and Thailand. For production activities that are less labor intensive but more sensitive to transportation cost, companies are resorting to "near shoring" or relocating to closer markets.

It is therefore clear that the changes in operating conditions around the world are driving companies to rethink their investment strategies specially in sectors which are technology intensive. Policy makers on the other hand need to insure their location align skills supply and demand in key target sectors and that there is no mismatch between skills provided by the education system and those required to maintain their competitiveness.  Ensuring that the youth obtain the skills that are relevant for their industry should be a priority, especially in the ICT industry. IDAL could play a role in that sense through encouraging the formation of specialized tech clusters which foster innovation and entrepreneurship.